Barrick Gold Considers $18 Billion Buyout of Newmont Mining


The mining sector already has enough excitement is in the form of the massive Goldcorp/Newmont merger that’s being approved of. This arrangement would see the formation of the world’s largest gold mining company.

Much to the surprise of industry analysts, however, another major company is jumping into this merger, offering their own play to form a monolith in the global gold sector. Canadian-based Barrick Gold Corp (TSE: ABX), already the world’s largest gold miner, said on Friday that it’s considering a proposal to acquire Newmont Mining Corp (NYSE: NEM) through an all-stock transaction valued at up to $18 billion.

Such major acquisitions have been largely dormant in the gold sector for the past few years, with most companies focusing on cutting costs as investors grew increasingly critical of how management teams managed their capital. However, this has all but reversed starting earlier this year, when Barrick made a $6.1 billion buyout offer of Randgold Resources. Since then, Newmont extended a $10 billion offer to buy their smaller, Canadian rival Goldcorp Inc (TSE: G), a deal which would make Newmont the largest gold miner in the world.

Since then, Barrick has added that it has not considered offering a premium for Newmont shareholders, arguing that a premium isn’t necessary as the new, mega-gold miner would lower operating costs to levels neither could do on their own. Newmont responded later on Friday.

We do not intend to speculate on Barrick’s interest or motivation,” said Omar Jabara, Newmont Spokesman. “We remain confident that the combination of Newmont and Goldcorp represents an unparalleled opportunity to create value for our shareholders and deliver industry-leading returns for decades to come.”

Back in 2014, Barrick Gold and Newmont were previously talking about the idea of a possible merger, but discussions fell apart. Former Barrick chairman Peter Munk would describe their American counterpart as “not shareholder-friendly.” Pierre Lassonde, former president of Newmont now at the head of another gold company, voiced skepticism over the newly announced offer. “The last time the whole thing broke down in acrimony. Why do you think that now they would do this at this point in time,” he added.

In response to the news announcement, Barrick Gold’s stock dropped around 2.4 percent. Newmont Mining, however, saw shares prices increase around 3 percent as the markets reacted well to Newmonts increasing desirability from other miners.

Barrick Gold Company Profile

Barrick Gold Corp is a gold mining company. The Company is principally engaged in the production and sale of gold and copper, as well as related activities, such as exploration and mine development. The Company’s segments, include Barrick Nevada, Golden Sunlight, Hemlo, Jabal Sayid, Kalgoorlie, Lagunas Norte, Lumwana, Porgera, Pueblo Viejo, Turquoise Ridge, Veladero and Zaldvar.

Pueblo Viejo, Lagunas Norte, Veladero and Turquoise Ridge are its individual gold mines. The Company, through its subsidiary Acacia, owns gold mines and exploration properties in Africa. Its Porgera and Kalgoorlie are gold mines. Zaldivar and Lumwana are copper mines. The Pascua-Lama project is located on the border between Chile and Argentina. The Company owns a number of producing gold mines, which are located in Canada, the United States, Peru, Argentina, Australia and the Dominican Republic. – Reuters